ObamaCare Death Spiral

Forbes defines a health insurance death spiral as “adverse selection” which happens when only high risk people buy insurance:

If only people on their death beds buy life insurance, the insurance company would quickly go out of business. Equally, if only sick people buy health insurance, the math will not work…

To reduce the risk of adverse selection, the Affordable Care Act created a penalty for people who do not enroll in insurance. However, the penalty for not having insurance in 2016 was the higher of $695 per individual or 2.5% of income. Although $695 is a lot of money, it is still cheaper than health insurance policies offered on the exchange.

Death Spiral

That’s because ObamaCare rates are going up an average of 25% next year. And, according to the Wall Street Journal, that’s just “for the mid-level insurance plans that are performing the best, not the average increase of all ObamaCare coverage.”